TIDMFOOT
RNS Number : 1158E
Footasylum PLC
16 October 2018
16 October 2018
This announcement contains inside information
Footasylum plc
Results for the 26 weeks ended 25 August 2018
Revenue growth across all channels and major product categories,
despite challenging trading conditions
Profitability impacted by lower gross margin and by the
extensive investments being made to position the Company for future
growth
Footasylum plc ("Footasylum" or the "Company"), the UK-based
fashion retailer focusing on branded footwear and apparel, today
announces its unaudited results for the 26 week period ended 25
August 2018 (comparative figures are shown for the 26 week period
ended 26 August 2017).
HY19 HY18
-------------------------------------------- ------- -----
Revenue (GBPm) 98.6 83.2
-------------------------------------------- ------- -----
Adjusted EBITDA (GBPm)1 (1.5) 4.4
-------------------------------------------- ------- -----
Adjusted EBITDA margin (1.5)% 5.3%
-------------------------------------------- ------- -----
Adjusted (loss) / profit before tax (GBPm)2 (4.0) 2.3
-------------------------------------------- ------- -----
Non-GAAP adjusted diluted EPS (p)3 (3.98)p 1.70p
-------------------------------------------- ------- -----
Net cash (GBPm) (cash less bank overdrafts) 4.5 (0.7)
-------------------------------------------- ------- -----
Financial highlights
-- Currently trading in line with the FY19 expectations that
were rebased with the trading update of 3 September 2018
-- Revenue up 19% to GBP98.6m, (HY18: GBP83.2m) with growth
across all channels and major product categories
o Store revenue up 12% to GBP66.3m (HY18: GBP59.0m) albeit
impacted by challenging trading conditions and delays in store
openings and upsizes
o Online sales up 29% to GBP30.2m (HY18: GBP23.5m) now
accounting for 31% of total revenue (HY18: 28%)
o Wholesale up 200% to GBP2.1m (HY18: GBP0.7m)
-- Adjusted EBITDA of (GBP1.5m) (HY18: GBP4.4m) reflects a lower
gross margin and increased investment for future growth
-- Adjusted loss before tax of (GBP4.0m) (HY18: profit GBP2.3m)
-- Net cash balances at period end of GBP4.5m (FY18: (GBP0.7m))
Operational highlights
-- Opened one new store, bringing the total store estate to 66,
with plans well advanced to open a further five stores and upsize a
total of five stores across the financial year, with four upsizes
planned before peak trading
-- Significantly improved the online experience with further
investment in the footasylum.com website and the relaunch of our
app
-- Launched a new consumer rewards programme, UNLCKD, to improve
the consumer experience and provide greater consumer insight
Barry Bown, Executive Chairman of Footasylum, commented:
"This has been a difficult trading period for Footasylum as we
have contended with tough conditions on the high street and some
delays in our programme of new store openings and upsizes ahead of
the peak trading period.
While we are pleased to be reporting good top line growth, and a
particularly strong year-on-year revenue performance in both online
and wholesale, our profitability has been impacted both by a lower
overall gross margin from higher clearance activity in stores, as
well as the extensive investments that are being made to position
the Company for future growth.
We are encouraged by the early results and trends that we are
seeing from our investments in key areas such as digital and
marketing, and see substantial opportunity for further progress
across these and other parts of our operations. In the longer-term,
we remain confident that the Company's differentiated, product-led,
multi-channel proposition, combined with strong partnerships with
core suppliers, will underpin our future progress."
Analyst meeting and availability of Half Year Report
A meeting for analysts will be held today at the London Stock
Exchange commencing at 10.00am. Please contact Powerscourt on the
details below for further information or to confirm attendance. A
copy of the presentation will be available on the Company's
Investor website: http://investors.footasylum.com/. Copies of this
Half Year Report are available from the Company's website
http://investors.footasylum.com/ and from the Company Secretary at
Sandbrook House, Sandbrook Park, Rochdale, Lancashire, OL11 1RY
Enquiries:
Footasylum plc Tel: +44 (0) 1706 714 265
Barry Bown, Executive Chairman
Danielle Davies, Chief Financial Officer
GCA Altium Limited (Financial and Nominated Advisor) Tel: + 44 (0) 20 7484 4040
Phil Adams
Sam Fuller
Tim Richardson
Liberum Capital Limited (Broker) Tel: +44 (0) 20 3100 2222
John Fishley
Andrew Godber
Powerscourt (Financial Public Relations) Tel: + 44 (0) 20 7250
1446
Rob Greening
Lisa Kavanagh
Isabelle Saber
Consumer website: https://www.footasylum.com/
Investor website: http://investors.footasylum.com/
Notes
(1) Adjusted EBITDA is stated as earnings before interest, tax,
depreciation, amortisation, exceptional items and the share-based
payment charge.
(2) Adjusted profit before tax is stated as adjusted EBITDA
after interest, depreciation and amortisation.
(3) Non-GAAP adjusted diluted earnings per share ("EPS") is
stated as profit after tax ("PAT") before exceptional items and the
share-based payment charge per the diluted issued ordinary shares
as at 25 August 2018. Share options are not included in the
calculation at HY19 as they would be anti-dilutive.
Disclaimer
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014. The person responsible for
making this announcement on behalf of Footasylum is Nancy Kelsall,
Company Secretary.
Certain statements in this financial report are forward-looking.
Where the financial report includes forward-looking statements,
these are made by the Directors in good faith based on the
information available to them at the time of their approval of this
report. Such statements are based on current expectations and are
subject to a number of risks and uncertainties, including both
economic and business risk factors that could cause actual events
or results to differ materially from any expected future events or
results referred to in these forward-looking statements. Unless
otherwise required by applicable law, regulation or accounting
standards, the Company undertakes no obligations to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
About Footasylum
Footasylum is a UK-based fashion retailer focusing on the
branded footwear and apparel markets. The Company retails
"on-trend" product ranges which are predominantly aimed at 16 to
24-year-old fashion-conscious consumers and are sourced from an
extensive stable of third-party and own brands. These include
well-known sports and casual footwear and apparel brands, as well
as up-and-coming brands and own label products.
Examples of third-party brands include: adidas; Nike; The North
Face; Gym King; Converse; New Balance; EA7; Vans; Nicce London;
Under Armour; Tommy Hilfiger; and Calvin Klein. Examples of
Footasylum's own brands include: Kings Will Dream and Alessandro
Zavetti.
The Company operates a multi-channel model which combines a
66-strong store estate - in a variety of high street, mall and
retail park locations in cities and towns throughout Great Britain
- with a fast-growing online platform and a recently launched
wholesale arm for distributing its own brand ranges via a network
of partners.
Footasylum was founded in 2005 and the Company's ordinary shares
were admitted to trading on AIM in November 2017.
EXECUTIVE CHAIRMAN'S STATEMENT
While it has undoubtedly been a challenging trading period for
the Company, I am pleased that we continued to deliver good top
line growth. We continue to evolve with changing market conditions
and our multi-channel proposition affords us the ability to refocus
our investment across channels to ensure we remain well positioned
to capture the growth opportunities that we see ahead of us.
Our strategic priorities
The key pillars of our growth strategy continue to be: the
development of our online and digital marketing platforms; a
disciplined UK store roll out and upsizing in key locations; and
the expansion of our wholesale operation alongside the growth of
our own brand products. Our strategy, combined with our
differentiated offering and hyper-local approach, is aimed at
leveraging the trends and opportunities that we see in the
marketplace.
Online
There is substantial further growth potential in the online
channel and we are investing significantly in technology and talent
to enable us to reach consumers more effectively, improve their
online experience with Footasylum, and make it easier for them to
buy more from us. We continue to target 50% of our revenue to come
from online and wholesale channels in the medium-term.
Stores
Physical stores form the foundation of our brand and provide a
solid base for our multichannel approach. They drive growth by
accessing more key brands, a wider range of product and more
exclusives. Our store rollout and upsizing strategy builds on these
foundations by increasing floor space in key locations, allowing us
to present our product range more effectively, improve selling
capacity and become an even more attractive proposition for our key
suppliers.
Wholesale
Our wholesale operation enhances the market positioning of our
own brands and gives them a longer life cycle. Where appropriate,
it allows us to take advantage of a broader market allowing us to
maximise their potential as well as building their credibility in
the market. We see volume potential in this area and believe it
represents another route to access international markets.
INVESTMENTS for growth
In order to maximise the growth opportunities ahead of us, we
have continued to invest in necessary technology, people and
infrastructure both online and in stores.
Digital
We have made great improvements in our online offering by
placing our app and rewards scheme at the centre of consumer
transactions. We have fundamentally redesigned the website,
introduced live chat, improved imagery, checkout and the basket to
improve conversion. We are seeing early indicators of success with
online conversion rates improving meaningfully.
Mobile conversion has been particularly strong and revenue
generated from mobile devices increased from 60% to 66% in the
period. To continue to address this growth opportunity, we have
relaunched our new Footasylum app alongside our rewards scheme,
"UNLCKD". In addition to offering tiered benefits to our consumers,
this cross-channel rewards scheme, in combination with the app,
also gives us a deeper understanding of our consumers.
Other actions to grow the online consumer base and their order
frequency have included extending the cut-off time for next day
delivery and trialling same day delivery in some areas. Early
feedback is positive; click and collect now accounts for 12% of all
online orders (HY18: 11%) and our trust pilot score has improved
considerably to 7.7.
Marketing
Our marketing function has been restructured in order to create
focused teams dedicated to brand, marketing and creativity, which
will enable us to plan and execute the creative campaigns needed to
engage and entertain our consumers.
Our marketing approach is designed to access the rapidly growing
online consumer base whilst also driving footfall into stores. We
have improved our social media engagement through continued
collaboration with key influencers while steadily building our
content and presence on key platforms. In addition, we are
improving our data analytics and consumer segmentation to better
understand our tribes, targeting online shoppers with a high
propensity to purchase in-store and rolling out location specific
digital campaigns to drive in-store sales.
Our 10,000 sq ft studio in Manchester has strengthened our
in-house design, photography and videography capabilities to
support our activities, both digitally and through our stores. The
studio allows us to increase the output and quality of product
photography and videography whilst dramatically increasing
distribution efficiency; all of which means we are reacting faster
to evolving trends and maximising relevance to our consumers.
Marketing campaigns with big brands have stepped up
significantly in the first half with successful campaigns executed
for Nike and adidas, amongst others.
Stores
Investment in our store estate is important for the success of
our business. In the last six months, we have refocussed our
investment priorities to scale back the number of new store
openings in favour of refitting and upsizing strategically
important locations. We employ a robust and consistent investment
framework that not only delivers a return on capital, but - even
more importantly at this stage in our development - also enables us
to engage with key suppliers more effectively. In this financial
year alone, we plan to upsize a total of five stores, including the
strategically important, flagship stores in London's Stratford and
White City shopping centres. By the end of FY20, after including
the two upsizes planned for that year, we will have completed a
total 14 out of the 20 stores we initially identified as potential
upgrades. We have been encouraged by the early success of our
upsized stores and the resulting progress with suppliers, and
firmly believe that the investments we are making in this area are
an effective use of capital.
brands
Our continued ability to build relationships with global brands
is imperative for our growth. One of my personal immediate
priorities on joining the business was to utilise my experience and
network of contacts to help boost the team's capabilities to
further develop our already strong third-party relationships.
Building brand relationships takes time, but through a
combination of store openings and upsizes, targeted marketing
campaigns and streamlined systems, we believe that we are
differentiating ourselves and positioning the Company for
success.
Our actions in this area continue to bear fruit. Multiple new
brands are launching, we have gained access to additional
categories from key third party suppliers and are pleased that we
are now gaining access to exclusive product. At the same time, we
are broadening the range of brands and product offered in our
stores.
The development of our own brands also remains a priority, as
they underline the quality and choice we offer our consumers and
ensure that we can drive trends quickly when we identify gaps in
the ranges of our third-party brands.
Capital structure and dividend policy
The Board is satisfied that the current capital and funding
structure of the Company is robust, allowing it to invest in the
systems and stores that will fuel future growth. The Board
continues to apply strong cash controls and we remain (and expect
to remain) in compliance with the covenants of our bank
facilities.
In the short-term, we will retain the Company's earnings for
re-investment to continue funding growth. Therefore, we are not
proposing an interim dividend for HY19. Ultimately it is the
Board's intention to pursue a progressive dividend policy which
will be balanced against the need to retain sufficient earnings to
expand and develop the Company.
Our COLLEAGUES
We have continued to strengthen several of our teams, attracting
and retaining top talent and reinforcing our existing capabilities
in areas including retail, buying and human resources. In
particular, we've brought on a vastly experienced Head of Retail to
lead on tactical strategy, delivery, consumer experience and
trading in stores.
We are a business that is committed to delivering on our
strategic objectives and focused on delivering sustainable
long-term growth, and our colleagues across the business remain
more committed than ever to this objective. I would like to take
this opportunity to thank our senior management team and all our
colleagues for their continuing hard work and continued dedication
in what has been, at times, a challenging six months.
Current trading and outlook
The Company is trading in line with the FY19 expectations that
were rebased at the time of the trading update of 3 September
2018.
While the UK high street is undoubtedly a challenging trading
environment, the Board stands behind its growth strategy and is
confident that targeted new store openings and upsizes, combined
with focused investment in the online channel will materially
improve Footasylum's existing strong brand relationships and
enhance the consumer experience. However, in order to preserve the
balance sheet given the lower expectations for profitability in the
near term, from FY20 the Company will scale back its targeted store
expansion programme to two new stores and two upsizes per annum,
until the capacity for greater investment returns. As a result,
associated costs in FY20 will be lower than previously
expected.
Consequently, expected capital expenditure of GBP16m in FY19 is
expected to represent its peak level with the associated
depreciation flowing through in later years. The Company's forecast
for its FY19 cash position is unchanged and remains in line with
market expectations.
The Board is encouraged by the progress made to date in
strengthening its partnerships with core suppliers and improvements
in its technology and consumer systems. In the longer-term, the
Board remains confident that the Company's differentiated,
product-led, multi-channel proposition, combined with strong
partnerships with core suppliers, will underpin its continued
progress.
Barry Bown
EXECUTIVE CHAIRMAN
FINANCIAL REVIEW
Absolute
HY19 HY18 Change
-------------------------------------------- ------ ----- ---------
Revenue (GBPm) 98.6 83.2 +15.4
-------------------------------------------- ------ ----- ---------
Gross profit (GBPm) 42.3 37.3 +5.0
-------------------------------------------- ------ ----- ---------
Gross margin 42.9% 44.8% (190) bps
-------------------------------------------- ------ ----- ---------
Adjusted EBITDA (GBPm)1 (1.5) 4.4 (5.9)
-------------------------------------------- ------ ----- ---------
Adjusted EBITDA margin (1.5)% 5.3% (680) bps
-------------------------------------------- ------ ----- ---------
Adjusted (loss) / profit before tax (GBPm)2 (4.0) 2.3 (6.3)
-------------------------------------------- ------ ----- ---------
(Loss) / Profit before tax (GBPm) (2.5) 1.7 (4.2)
-------------------------------------------- ------ ----- ---------
Non-GAAP adjusted diluted EPS (p)3 (3.98) 1.70 (5.68)
-------------------------------------------- ------ ----- ---------
Net cash (GBPm) (cash less bank overdraft) 4.5 (0.7) +5.2
-------------------------------------------- ------ ----- ---------
1. Adjusted EBITDA is stated as earnings before interest, tax,
depreciation, amortisation, exceptional items and the share-based
payment charge.
2. Adjusted profit before tax is stated as adjusted EBITDA after
interest, depreciation and amortisation.
3. Non-GAAP adjusted diluted earnings per share ("EPS") is
stated as profit after tax ("PAT") before exceptional items and the
share-based payment charge per the diluted issued ordinary shares
as at 25 August 2018. Share options are not included in the
calculation at HY19 as they would be anti-dilutive.
Revenue for the period increased 19 per cent, reflecting sales
growth in major product categories, across all channels, from
further store roll out, increasing volumes of online traffic and
the growth of the Company's wholesale business. The gross margin
was 42.9 per cent, down 190 basis points (HY18: 44.8 per cent) due
to a combination of channel mix and clearance activity in stores
and online contributing to a reduction in both footwear and apparel
margin.
Footasylum continued to invest in its infrastructure and talent
to support further growth. This, combined with the lower sales and
gross margin, resulted in an adjusted EBITDA loss of GBP1.5m (HY18:
profit of GBP4.4m).
Revenue
Overall revenue increased 19 per cent in HY19 to GBP98.6 million
(HY18: GBP83.2 million). Revenue is reported net of sales taxes and
returns, which remained low as a proportion of revenue reflecting
Footasylum's product offering.
Revenue by channel
GBPm HY19 HY18 Change
---------- ----- ----- ------
Store 66.3 59.0 12%
---------- ----- ----- ------
Online 30.2 23.5 29%
---------- ----- ----- ------
Wholesale 2.1 0.7 200%
---------- ----- ----- ------
98.6 83.2 19%
---------- ----- ----- ------
Footasylum operates a multi-channel model across a 66-strong
store estate in the UK, online and via a wholesale business which
distributes Footasylum own brand products to select partners. In
HY19 the store estate accounted for 67 per cent of total revenue
(HY18: 71 per cent), online for 31 per cent of total revenue (HY18:
28 per cent) and wholesale for 2 per cent of total revenue (HY18: 1
per cent).
Menswear, including both apparel and footwear, represented 68
per cent of total revenue in HY19. This has decreased as a
proportion of total revenue from 70 per cent in HY18, reflecting
growth in women's ranges which, along with children's ranges, were
launched in selected stores as well as online.
Stores
Store revenue increased 12% on last year, and although a good
performance, growth was impacted by challenging summer trading
combined with delays in delivering both planned upsizes and new
stores. Footasylum opened one new store (HY18: three) in the period
and is planning to deliver four upsizes ahead of the peak Christmas
trading period. Across this financial year, we plan to deliver a
total of six new stores and five upsizes.
Of the 66 stores open at 25 August 2018, 64 were operated under
the core Footasylum fascia, while a further two stores operate
under offshoot fascia, branded Drome and SEVEN. These offshoot
stores accounted for c.1 per cent of total revenue in both HY19 and
HY18 but play a strategic role in strengthening supplier
relationships and providing access to third party products.
Online
Online revenue continues to grow strongly, up 29 per cent in
HY19 to GBP30.2 million (HY18: GBP23.5 million), accounting for 31
per cent of total revenue, up from 28 per cent in HY18. The Company
sells across five platforms including one for each of its three
fascias, Footasylum, Drome and SEVEN, as well as its own brand
website for Kings Will Dream, which launched in FY18.
More than 80 per cent of the traffic to these websites in HY19
came from mobile and tablet devices, in line with the prior period.
The Company continues to develop its mobile offering, with apps
launched in the year for Footasylum, Kings Will Dream and SEVEN.
Several of our technological enhancements, including the website
redesign and consumer rewards programme, were launched late in the
period but are showing promising early outcomes.
Wholesale
In March 2017 Footasylum launched its wholesale operation,
selling its own brands - initially Kings Will Dream - through a
network of partners from small stores to major European operators.
Revenue from wholesale was GBP2.1 million in HY19 (HY18: GBP0.7
million), around 2 per cent of total revenue (HY18: 1 per
cent).
As a result of its online and wholesale operations, the Company
generated 3 per cent of its revenue internationally in HY19 (HY18:
2 per cent).
Revenue by product category
GBPm HY19 HY18 Change
------------ ---- ---- ------
Footwear 53.8 45.9 17%
------------ ---- ---- ------
Apparel 41.2 33.5 23%
------------ ---- ---- ------
Accessories 3.6 3.8 (5)%
------------ ---- ---- ------
98.6 83.2 19%
------------ ---- ---- ------
Footwear experienced the largest absolute increase of GBP7.9m,
or 17 per cent, to GBP53.8 million while apparel grew the fastest
at 23 per cent, to GBP41.2 million. Accessories, which remain a
small proportion of overall revenue, were down 5 per cent to GBP3.6
million. In HY19, Footasylum sold around 18,000 SKUs (HY18: 15,000
SKUs) across all channels, with the top 20 SKUs accounting for just
8 per cent of HY19 revenue (HY18: 7 per cent), highlighting a
limited reliance on any one product.
Gross margin
Footasylum's routes to market have differing margin profiles,
reflecting the underlying product mix across footwear, apparel and
accessories. The overall gross margin will vary due to the impact
of this mix, as well as the proportion of revenue coming from the
Company's own brand labels in any given period. As previously
announced, gross margin in the Period was adversely impacted by a
combination of mix and a higher amount of clearance activity in
stores and online.
In the last six months we highlighted two stock issues -
footwear and some bedroom brands apparel - as the key drivers of
our lowered gross margin expectations for FY19 and beyond. In the
period we worked through the footwear stock and we are pleased to
see footwear margins beginning to improve. However, the impact of
the loss of exclusivity on some bedroom brands' apparel has driven
increased clearance activity.
Investing for growth
Footasylum is investing ahead of the curve in its infrastructure
to support future business expansion. The Company is now operating
a second distribution facility in Rochdale in addition to its
existing distribution centre. It has also upgraded its technology
systems to support its growing digital presence and has a larger
Head Office team and central functions. During the period
Footasylum had on average 1,432 full time equivalent employees
across the Company (HY18: 1,162). Admin expenses include rent and
rates on the Company's store portfolio, distribution costs,
marketing costs as well as head office costs. Excluding exceptional
items, depreciation, amortisation and the share-based payment
charge, admin expenses have increased to 44.5 per cent of revenue
(HY18: 39.5 per cent of revenue).
Adjusted EBITDA decreased to (GBP1.5) million (HY18: GBP4.4
million) reflecting the lower gross margin and higher costs from
investment in the Company's operations.
Depreciation and amortisation was GBP2.3 million for the period
(HY18: GBP2.0 million), reflecting the increased capital
expenditure in new and upsized stores, investments in IT and in the
distribution facility.
Exceptional items
Exceptional items in the period totalled GBP2.3 million income
(HY18: GBP(0.6) million cost) relating to the early exit and
surrender of one of our store premises.
Earnings per share
After exceptional items, profit / (loss) after tax was GBP(2.7)
million (HY18: GBP1.3 million). Following a capital reorganisation
and an issue of new ordinary shares at the time of the IPO in
November 2017, the Company had 104,474,390 ordinary shares of
GBP0.001 each in issue (pre-IPO: 6,000 ordinary shares of GBP1
each) as at 25 August 2018. The non-GAAP adjusted diluted EPS of
(3.98)p (HY18: 1.70p) is stated as profit after tax before
exceptional items and the share-based payment charge per the
diluted issued ordinary shares as at 25 August 2018 for both HY19
and HY18. Share options are not included in the calculation at HY19
as they would be anti-dilutive.
Cash and financial position
26 week 26 week
period ended period ended
GBPm 25 Aug 2018 26 Aug 2017
--------------------------------------------------------- ------------- -------------
Adjusted EBITDA (1.5) 4.4
--------------------------------------------------------- ------------- -------------
Working capital (2.0) (4.0)
--------------------------------------------------------- ------------- -------------
Corporation tax (0.9) (0.9)
--------------------------------------------------------- ------------- -------------
Free cash flow (4.4) (0.5)
--------------------------------------------------------- ------------- -------------
Property, plant and equipment and intangible assets (4.8) (2.6)
--------------------------------------------------------- ------------- -------------
Cash (used in) / generated from financing activities (0.2) 0.2
--------------------------------------------------------- ------------- -------------
Net exceptional income / (cost) 2.3 (0.6)
--------------------------------------------------------- ------------- -------------
Other 0.2 0.0
--------------------------------------------------------- ------------- -------------
Net cash flow (6.9) (3.5)
--------------------------------------------------------- ------------- -------------
Cash and cash equivalents at beginning of period 11.4 2.8
--------------------------------------------------------- ------------- -------------
Cash and cash equivalents / (overdraft) at end of period 4.5 (0.7)
--------------------------------------------------------- ------------- -------------
Footasylum had net cash of GBP4.5 million at 25 August 2018 (26
August 2017: GBP(0.7) million) with a reduction in free cash flow
to GBP(4.4) million (HY18: GBP(0.5) million). The change in free
cash flow was due to lower EBITDA and a seasonal working capital
out flow.
Capex
At 25 Aug At 26 Aug
GBPm 2018 2017
-------------------------- --------- ---------
Capex on stores 1.5 2.5
-------------------------- --------- ---------
Warehouse 0.8 0.2
-------------------------- --------- ---------
Technology 1.2 0.5
-------------------------- --------- ---------
Other 0.8 0.3
-------------------------- --------- ---------
Total capital expenditure 4.3 3.5
-------------------------- --------- ---------
During HY19 capital expenditure was GBP4.3 million (HY18: GBP3.5
million). Of this amount, GBP1.5 million (HY18: GBP2.5 million) was
spent on enhancing the store estate, including opening 1 new store
and preliminary work on the new stores and upsizes which are
planned ahead of the peak trading period.
In July 2017 Footasylum negotiated a new multi-currency
revolving credit facility with HSBC of GBP30 million. The facility
was made available to fund capital expenditure and future working
capital requirements. The interest payable on the loan is LIBOR
plus 1.9 per cent. At 25 August 2018 the facility was undrawn and
the company was, and remains compliant with the associated
covenants.
Dividend policy
As disclosed at the time of the IPO the Directors intend, in the
short-term, to retain the Company's earnings for re-investment to
fund growth. It is the Directors' ultimate intention to pursue a
progressive dividend policy subject to the need to retain earnings
to expand the growth and development of the Group.
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the 26 weeks ended 25 August 2018
Unaudited Audited Audited
---------------------------------------- ----- ---------- ---------- -------------
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ----- ---------- ---------- -------------
Revenue 2 98,552 83,173 194,769
Cost of sales (56,263) (45,922) (107,160)
---------------------------------------- ----- ---------- ---------- -------------
Gross profit 42,289 37,251 87,609
Administrative expenses 3 (44,650) (35,473) (85,399)
Operating (loss) / profit (2,361) 1,778 2,210
---------------------------------------- ----- ---------- ---------- -------------
Underlying EBITDA* 3 (1,547) 4,359 12,457
---------------------------------------- ----- ---------- ---------- -------------
Depreciation and amortisation 3 (2,269) (2,000) (3,803)
---------------------------------------- ----- ---------- ---------- -------------
Share-based payments charge 3 (837) - (421)
---------------------------------------- ----- ---------- ---------- -------------
Operating (loss) / profit before
exceptional items (4,653) 2,359 8,233
---------------------------------------- ----- ---------- ---------- -------------
Exceptional items 3 2,292 (581) (6,023)
---------------------------------------- ----- ---------- ---------- -------------
Operating (loss) / profit (2,361) 1,778 2,210
---------------------------------------- ----- ---------- ---------- -------------
Finance expense (175) (36) (269)
---------------------------------------- ----- ---------- ---------- -------------
(Loss) / profit before income tax (2,536) 1,742 1,941
---------------------------------------- ----- ---------- ---------- -------------
Taxation (169) (463) (1,780)
---------------------------------------- ----- ---------- ---------- -------------
(Loss) / profit and total comprehensive
income for the financial period
attributable to shareholders (2,705) 1,279 161
---------------------------------------- ----- ---------- ---------- -------------
* Underlying EBITDA is stated as earnings before interest, tax,
depreciation, amortisation, exceptional items and share-based
payments charge
All activities relate to continuing operations.
Unaudited Audited Audited
-------------------------------------------------------------------- ----- ---------- ---------- -------------
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
Notes 2018 2017 2018
-------------------------------------------------------------------- ----- ---------- ---------- -------------
Basic and diluted earnings per share attributable to equity
shareholders of the Company:
-------------------------------------------------------------------- ----- ---------- ---------- -------------
Basic 5 -2.59p 1.64p 0.19p
-------------------------------------------------------------------- ----- ---------- ---------- -------------
Diluted 5 -2.59p 1.64p 0.18p
-------------------------------------------------------------------- ----- ---------- ---------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the 26 weeks ended 25 August 2018
Unaudited Audited Audited
----------------------------------- ---------- ---------- -------------
At At At
25 August 26 August 24 February
2018 2017 2018
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------------
Non-current assets
Intangible assets 791 21 477
Property and equipment 21,441 15,652 19,905
------------------------------------ ---------- ---------- -------------
22,232 15,673 20,382
----------------------------------- ---------- ---------- -------------
Current assets
Inventory 43,479 30,620 35,720
Trade and other receivables 13,318 7,890 7,493
Deferred tax asset 104 110 104
------------------------------------ ---------- ---------- -------------
Cash and cash equivalents 4,511 4,008 11,416
------------------------------------ ---------- ---------- -------------
61,412 42,628 54,733
----------------------------------- ---------- ---------- -------------
Total assets 83,644 58,301 75,115
------------------------------------ ---------- ---------- -------------
Current liabilities
Trade and other payables (38,513) (25,993) (27,977)
Bank overdraft - (4,728) -
Preference shares - (18,700) -
----------------------------------- ---------- ---------- -------------
(38,513) (49,421) (27,977)
----------------------------------- ---------- ---------- -------------
Net current assets / (liabilities) 22,899 (6,793) 26,756
------------------------------------ ---------- ---------- -------------
Non-current liabilities
Accruals and deferred income (4,745) (2,989) (4,693)
Net obligation under finance lease
and hire purchase (147) (183) (235)
Director loans - (3,850) -
(4,892) (7,022) (4,928)
----------------------------------- ---------- ---------- -------------
Total liabilities (43,405) (56,443) (32,905)
------------------------------------ ---------- ---------- -------------
Net assets 40,239 1,858 42,210
------------------------------------ ---------- ---------- -------------
Equity
Share capital 104 6 104
Share premium account 3,510 249 3,510
Retained earnings 36,625 1,603 38,596
------------------------------------ ---------- ---------- -------------
Total equity 40,239 1,858 42,210
------------------------------------ ---------- ---------- -------------
FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the 26 weeks ended 25 August 2018
Unaudited Audited Audited
---------------------------------------- ----- ---------- ---------- -------------
At At At
25 August 26 August 24 February
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ----- ---------- ---------- -------------
Cash generated from operating
activities
----- ---------- ---------- -------------
(Loss) / profit for the period: 3 (2,705) 1,279 161
----- ---------- ---------- -------------
Adjustments for:
----- ---------- ---------- -------------
Depreciation of property, plant
and equipment 3 2,269 2,000 3,803
----- ---------- ---------- -------------
Loss / (Gain) on disposal of tangible
assets 3 212 (1) (7)
----- ---------- ---------- -------------
Net finance charge 175 36 269
----- ---------- ---------- -------------
Share-based payments charge 3 837 - 421
----- ---------- ---------- -------------
Taxation charge 169 463 1,780
----- ---------- ---------- -------------
Increase in stock (7,759) (7,098) (12,199)
----- ---------- ---------- -------------
Increase in debtors (5,825) (4,281) (3,878)
----- ---------- ---------- -------------
Increase in creditors 11,549 7,347 10,727
----- ---------- ---------- -------------
Corporation tax paid (879) (884) (1,787)
---------------------------------------- ----- ---------- ---------- -------------
Net cash used in operating activities (1,957) (1,139) (710)
---------------------------------------- ----- ---------- ---------- -------------
Investing activities
----- ---------- ---------- -------------
Purchases of property, plant and
equipment (4,298) (2,581) (8,005)
Purchase of intangible assets (453) - (530)
Sale of property, plant and equipment - 9 18
---------------------------------------- ----- ---------- ---------- -------------
Net cash used in investing activities (4,751) (2,572) (8,517)
---------------------------------------- ----- ---------- ---------- -------------
Financing activities
----- ---------- ---------- -------------
Repayment of finance lease liabilities (66) 188 (75)
----- ---------- ---------- -------------
Interest paid (131) (36) (214)
----- ---------- ---------- -------------
Proceeds from the issue of ordinary
share capital - - 43,418
----- ---------- ---------- -------------
Share issue costs - - (2,318)
----- ---------- ---------- -------------
Debt issue costs - - (330)
----- ---------- ---------- -------------
Repayment of preference shares - - (18,700)
----- ---------- ---------- -------------
Repayment of Director loan account
capital - - (3,850)
----- ---------- ---------- -------------
Repayment of Director loan account
interest - - (127)
---------------------------------------- ----- ---------- ---------- -------------
Net cash (used in) / generated
from financing activities (197) 152 17,804
---------------------------------------- ----- ---------- ---------- -------------
Net (decrease) / increase in cash
and cash equivalents (6,905) (3,559) 8,577
---------------------------------------- ----- ---------- ---------- -------------
Cash and cash equivalents at beginning
of period 11,416 2,839 2,839
---------------------------------------- ----- ---------- ---------- -------------
Cash and cash equivalents / (overdraft)
at end of period 4,511 (720) 11,416
---------------------------------------- ----- ---------- ---------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reconciliation of 26 week period to 26 August 2017
Retained
Share Share earnings / Total
capital premium (losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- ----------- --------
Balance at 25 February 2017 6 249 324 579
-------- -------- ----------- --------
Comprehensive Income:
-------- -------- ----------- --------
Profit for the period - - 1,279 1,279
---------------------------- -------- -------- ----------- --------
Balance at 26 August 2017 6 249 1,603 1,858
---------------------------- -------- -------- ----------- --------
Reconciliation of 26 week period to 25 August 2018
Retained
Share Share earnings / Total
capital premium (losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ -------- -------- ----------- --------
Balance at 24 February 2018 104 3,510 38,596 42,210
-------- -------- ----------- --------
Comprehensive Income:
-------- -------- ----------- --------
Loss for the period - - (2,705) (2,705)
------------------------------------------------------ -------- -------- ----------- --------
104 3,510 35,891 39,505
------------------------------------------------------ -------- -------- ----------- --------
Transactions with owners recorded directly in equity:
-------- -------- ----------- --------
Share-based payments charge - - 734 734
------------------------------------------------------ -------- -------- ----------- --------
Balance at 25 August 2018 104 3,510 36,625 40,239
------------------------------------------------------ -------- -------- ----------- --------
Reconciliation of 52 week period to 24 February 2018
Retained
Share Share earnings / Total
capital premium (losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ -------- -------- ----------- --------
Balance at 25 February 2017 6 249 324 579
------------------------------------------------------ -------- -------- ----------- --------
Comprehensive Income:
------------------------------------------------------ -------- -------- ----------- --------
Profit for the period - - 161 161
------------------------------------------------------ -------- -------- ----------- --------
6 249 485 740
------------------------------------------------------ -------- -------- ----------- --------
Transactions with owners recorded directly in equity:
------------------------------------------------------ -------- -------- ----------- --------
Bonus issue of shares (i) 72 (72) - -
------------------------------------------------------ -------- -------- ----------- --------
Issue of shares (ii) 26 43,392 - 43,418
------------------------------------------------------ -------- -------- ----------- --------
Share issue costs (iii) - (2,318) - (2,318)
------------------------------------------------------ -------- -------- ----------- --------
Capital reduction (iv) - (37,741) 37,741 -
------------------------------------------------------ -------- -------- ----------- --------
Share-based payments charge - - 370 370
------------------------------------------------------ -------- -------- ----------- --------
Balance at 24 February 2018 104 3,510 38,596 42,210
------------------------------------------------------ -------- -------- ----------- --------
i On the 2 of November 2017, the Company issued bonus shares of
12 to 1 for existing shareholders
ii On the 2 of November 2017, the Company sub divided existing Ordinary shares by 1000
iii On the 2 of November 2017, the Company issued 26,474,390 ordinary shares
iv On the 13 February 2018, the Company reduced share premium
account by GBP37,740,525
1 BASIS OF PREPARATION
Footasylum plc (the "Company") is a company limited by shares
and incorporated and domiciled in the UK. Footasylum plc is
incorporated in the United Kingdom. The registered office is
Sandbrook House, Sandbrook Park, Rochdale, Lancashire, OL11 1RY.
The principal activity of the Company is the retail of sports and
fashion footwear and clothing.
The Consolidated and Company Financial Statements have been
prepared in accordance with IFRS and the International Financial
Reporting Interpretation Committee ("IFRIC") interpretations
endorsed by the EU and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The functional currency of the Company and its subsidiary
undertakings (the "Group") is pounds sterling and the financial
statements are presented in pounds sterling, rounded to the nearest
thousand.
These financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by
the EU. The accounting policies applied are consistent with those
disclosed in the Feb 2018 Annual Report.
The financial statements have been prepared under the historical
cost convention, as modified for financial assets and liabilities
at fair value through the Consolidated Income Statement.
The preparation of financial statements in conformity with
adopted IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The judgements, estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in
any future periods affected.
The financial information included in this preliminary statement
of results does not constitute statutory accounts within the
meaning of Section 435 of the Companies Act 2006 (the "Act"). The
financial information for the 52 week period ended 24 February 2018
has been extracted from the statutory accounts on which an
unqualified audit opinion has been issued.
2 SEGMENTAL REPORTING
The Directors consider there to be one operating and reportable
segment, being that of the sale of products through retail outlets,
the Group's website and wholesale.
Whilst the business and Chief Operating Decision Maker ('CODM')
does review analysis of revenues at a disaggregated level, as
disclosed below, information in relation to assess business
performance and make resource allocation decisions at a level below
the whole business is not made available. In particular, operating
profit is not calculated at a level below the whole business. As
such, the Directors consider there to be one operating and
reportable segment.
Unaudited Audited Audited
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
Revenue GBP'000 GBP'000 GBP'000
Store 66,253 59,039 133,119
---------- ---------- -------------
Web 30,212 23,482 59,027
Wholesale 2,087 652 2,623
---------- ---------- ---------- -------------
98,552 83,173 194,769
---------- ---------- ---------- -------------
Geographic Information
The following table provides analysis of the Group's revenue by
geographical market:
Unaudited Audited Audited
------------------ ---------- ---------- -------------
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
GBP'000 GBP'000 GBP'000
------------------ ---------- ---------- -------------
United Kingdom 96,000 81,491 191,282
Rest of the World 2,552 1,682 3,487
------------------ ---------- ---------- -------------
98,552 83,173 194,769
------------------ ---------- ---------- -------------
3 (LOSS) / PROFIT BEFORE TAX
This is stated after charging:
Unaudited Audited Audited
---------------------------------------------- ---------- ---------- -------------
26 Week 26 Week 52 Week
Period Period Period
ended ended Ended
25 August 26 August 24 February
2018 2017 2018
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- -------------
Exceptional (income) / costs (2,292) 581 6,023
---------------------------------------------- ---------- ---------- -------------
Depreciation of property, plant and equipment 2,269 2,000 3,803
---------------------------------------------- ---------- ---------- -------------
Loss / (Gain) on disposal of property, plant
and equipment 212 (1) (7)
---------------------------------------------- ---------- ---------- -------------
Exchange differences (103) 10 30
---------------------------------------------- ---------- ---------- -------------
Hire of assets - operating leases 8,187 6,628 14,572
Share-based payments charge 837 - 421
---------------------------------------------- ---------- ---------- -------------
Exceptional income in the period ended 25 August 2018 relate to
the early exit and surrender of one of our stores
(GBP2,292,000).
Exceptional costs in the period ended 26 August 2017 relate to
preparations for admission (GBP581,000).
Exceptional costs in the period ended 24 February 2018 relate to
preparations for admission (GBP4,145,000) and HMRC VAT provisions
(GBP1,878,000).
Total costs incurred in relation to the admission to trading on
AIM were GBP6,462,000 with GBP2,317,000 charged to the share
premium as being directly related to newly issued shares.
HMRC VAT provisions are made for known issues based on
management's interpretation of legislation and the likely outcome
of negotiations or litigation. Each provision is considered
separately and the amount provided reflects the best estimate of
the most likely outcome, being the single most likely in a range of
possible outcomes.
Unaudited Audited Audited
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
GBP'000 GBP'000 GBP'000
-------------------------------------------- ---------- ---------- -------------
EBITDA reconciliation
-------------------------------------------- ---------- ---------- -------------
Operating (loss) / profit (2,361) 1,778 2,210
-------------------------------------------- ---------- ---------- -------------
Exceptional items (2,292) 581 6,023
-------------------------------------------- ---------- ---------- -------------
Underlying operating (loss) / profit before
share-based payments charge, depreciation
and amortisation (4,653) 2,359 8,233
-------------------------------------------- ---------- ---------- -------------
Depreciation and amortisation 2,269 2,000 3,803
-------------------------------------------- ---------- ---------- -------------
EBITDA (2,384) 4,359 12,036
-------------------------------------------- ---------- ---------- -------------
Share-based payments charge 837 - 421
-------------------------------------------- ---------- ---------- -------------
Underlying EBITDA (1,547) 4,359 12,457
-------------------------------------------- ---------- ---------- -------------
Underlying EBITDA is calculated as Group underlying operating
profit under IFRS plus depreciation and amortisation. It excludes
exceptional items and IFRS2 related share-based payments
charge.
4 STAFF NUMBERS AND COSTS
Staff costs (including directors) consist of:
Unaudited Audited Audited
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
GBP'000 GBP'000 GBP'000
---------------------- ---------- ---------- -------------
Wages and salaries 16,387 11,829 28,284
Social security costs 909 700 1,447
Pension costs 112 61 127
---------------------- ---------- ---------- -------------
17,408 12,590 29,858
---------------------- ---------- ---------- -------------
The average number of employees (including directors) during the
period was as follows:
Unaudited Audited Audited
26 Week 26 Week 52 Week
Period Period Period
Ended Ended Ended
25 August 26 August 24 February
2018 2017 2018
--------------- ---------- ---------- -------------
Retail 894 745 885
Administration 291 224 243
Warehouse 247 193 184
--------------- ---------- ---------- -------------
1,432 1,162 1,312
--------------- ---------- ---------- -------------
5 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net
profit for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period.
Diluted earnings per share is calculated by dividing the net
profit for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that
would be issued on the conversion of all dilutive potential
ordinary shares into ordinary shares.
Unaudited Audited Audited
26 Week Period 26 Week Period 52 Week Period
Ended 25 August Ended 26 August Ended 24 February
2018 2017 2018
------------------------- ------------------------- -------------------------------
PAT before PAT before PAT before
exceptional exceptional exceptional
costs and costs and costs
share-based share-based and share-based
payments payments payments
PAT charge PAT charge PAT charge
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
Profit / (loss) attributable
to equity shareholders
of the parent (2,705) (4,160) 1,279 1,860 161 6,604
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
Number of shares
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
Weighted average number
of ordinary shares for
the purposes of basic earnings
per share 104,474,390 104,474,390 78,000,000* 78,000,000* 86,413,779 86,413,779
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
Effect of dilutive potential
ordinary shares:
Share options 5,218,930 5,218,930 - - 2,687,286 2,687,286
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
Weighted average number
of ordinary shares for
the purposes of diluted
earnings per share 109,693,320 109,693,320 78,000,000 78,000,000 89,101,065 89,101,065
Diluted shareholding at
25 August 2018 (Non-GAAP
measure)** 109,693,320 109,693,320 109,693,320 109,693,320 109,693,320 109,693,320
Non-GAAP diluted earnings
per share** -2.59p -3.98p 1.17p 1.70p 0.15p 6.02p
Basic earnings per share -2.59p -3.98p 1.64p 2.38p 0.19p 7.64p
Diluted earnings per share*** -2.59p -3.98p 1.64p 2.38p 0.18p 7.41p
------------------------------- ----------- ------------ ----------- ------------ ------------ -----------------
*Restated in accordance with IAS 33 to reflect the impact of the
sub-division and bonus issue of shares on 2 November 2017.
** Non-GAAP measure is based on shareholdings as at 25 August
2018. Share options are not included in the calculation at HY19 as
they would be anti-dilutive.
*** Share options in the diluted calculation as at 25 August
2018 have not been included as they would be anti-dilutive.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR MABPTMBTBBIP
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